Central America going nowhere

18 Aug 2007

THE BRAVE hope that privatisation would lead to a railway revival in Central America appears to be coming to naught.

Just three weeks after Railroad Development Corp filed for arbitration in its dispute with the government of Guatemala (RG 7.07 p414), FVG Chairman Henry Posner III wrote to all customers and employees of Ferrovías Guatemala on July 6 to announce that all rail services will be suspended with effect from October 1, once current commitments to its customers have been completed. Last year's declaration of lesividad had made it 'impossible to continue operations under the current circumstances', he explained.

Meanwhile, in Mexico, Genesee & Wyoming Inc announced on June 25 that it planned to hand back the 30-year concession to operate the Chiapas – Mayab railway and liquidate its subsidiary FCCM SA by the end of this year. The line leading to the Guatemalan border has been out of service since 280 km was damaged by Hurricane Stan in October 2005. Attempts to negotiate a reconstruction plan with the Mexican government had not been successful, according to GWI President & CEO John C Hellmann, who said the liquidation would result in a US$12m write-down this year.